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Ballmer Says Google's Growth Is 'Insane'
eldavojohn writes "Steve Ballmer spoke to the Seattle PI this week, commenting that Google's pace of employee growth is 'insane,' and the company has few successful businesses outside of Internet search and advertising. He referred to Google's non-search efforts as 'cute.' Google's current number of employees is nearly doubling each year. 'I don't really know that anybody's proven that a random collection of people doing their own thing actually creates value.' Mr. Ballmer went on complain that, in general, competition for good programmers has become an issue. Even 'hedge funds' are looking for skilled coders, making the HR fight between the two companies that much more challenging."
As I translate Steve's remarks:
ROaaarrrr!!!! We are finding ourselves *hoot hoot* having to spend more money to hire quality programmers *scratch*. *Beats Chest* Google BAD!
It was a joke! When you give me that look it was a joke.
Ok, joking aside, am I the only one who finds Balmer's complaint a bit hypocritical? It's true that Microsoft has incredible sums of cash. However, Windows and Office are pretty much the only things making Microsoft that cash. Nearly every other portion of the company either contributes very little to the bottom line, or actually loses Microsoft money. I imagine that's part of the reason why Microsoft keeps bundling extra software services with Windows: At least it raises the value of the software package. (In theory, anyway.)
That being said, I am going to (*gasp*) agree with him on one point. Having a bunch of programmers sitting around does not accomplish anything. They have to be in a full-on creative environment to do the truly impressive stuff. I think that the environment is slowly dissolving as Google loses it cohesion as a tight-knit company. They're growing incredibly fast, and I'm not sure they're really getting a good return on that growth. Obviously, only those inside the company can actually know that for sure, but it's not looking as good as it once did for those of us on the outside.
Javascript + Nintendo DSi = DSiCade
It is true. I took a job with an automated trading firm over Google. Partly I wanted to work for a smaller company. Google's dream 20% time looked like a myth when I actually interviewed there (none of my interviewers used their time because they had too much work to do on their normal projects). Also, there's something satisfying about directly measuring the success of your software in dollars. If it makes money, you run it.
Shockwave Flash movies are the greatest thing to happen to non-sequitur humor since Japan.
.... Jealousy
This is my opinion. To make sure you don't steal it, it's covered by the DMCA.
Throwing more resources at a problem isn't always the best way to solve it. For crying out loud, if anyone should know that it's Ballmer.
A business I worked at several years ago did the same thing. Grew too fast and outpaced the market. Wound up running out of cash and having to lay off all those new hires. One guy was an employee for two weeks. I helped interview the guy, too.
Weaselmancer
rediculous.
It doesn't sound like Mr. Balmer's been paying that close attention to the FOSS phenomenon. As far as I can tell a random bunch of people doing their own thing for the last 10-20 yrs have achieved just as much as traditional software business models, in some case more and in more profound & lasting ways.
I remember Bill Gates once saying that his worst fear for Microsoft was to become the next IBM - in other words, a big slow moving business with many levels of bureaucracy (this was some years ago and he was talking about the "old" IBM).
Well, it looks like Bills worst nightmare has come true, as evidenced by Ballmers comments. Google is now what Microsoft used to be - a lot of small teams working on their own projects without levels of bureaucracy interfering.
Google is not a random collection. You don't need to prove anything. Ballmer is not the authority on the matter. They are not all doing their own thing.
This is a CEO?
Slashdot: Failed Car Analogies. Amateur Lawyering. Anecdote Battles.
"A bunch of people doing their own thing", as you put it, is how the FOSS movement was started and largely continues. Your (Microsoft's) SEC filings indicate that you view FOSS as your major competitive threat. So, how insane is it?
C|N>K
He's just mad that they waited too long to try to just buy Google outright before they got big. Then he got even more upset when someone on his staff showed him the definition of "competition".
"Leo Fender was in a 'state of grace' when he designed the Stratocaster." -- Paul Reed Smith
So it's about doing someone else's ideas, but better?
To me, that sounds a *hell* of a lot better than doing someone else's ideas, but poorly, but having enough money and tenacity to wait out your failing competition.
Maybe that's just me, though.
It was a joke! When you give me that look it was a joke.
From Wikipedia:
Microsoft Corporation is a multinational computer technology corporation with global annual revenue of US$44.28 billion and 76,000 employees in 102 countries.
Google Inc. had 10,674 full-time employees as of December 31, 2006, Revenue $10.604 Billion USD (2006)
Which company looks more bloated?
Developers: We can use your help.
For the same reason Dorkvorak gets recognition here: to start flame wars.
Dedicated Cthulhu Cultist since 4523 BC.
"...the company has few successful businesses outside of Internet search and advertising."
Microsoft, 1980, one successful business, compilers and programming languages.
Microsoft, 1990, one successful product, operating systems. Their language business has become part of the support for their OS business.
Microsoft, 2000, finally have a really *solid* operating system for the first time since they dumped Xenix, and a handful of secondary businesses leveraged off their OS business.
It took Microsoft over 20 years to get to the point where they were more than a one-product company, and they're really not good at all where they can't use their position in the OS market to give people a magician's choice of products.
If google has a few successful businesses outside of Internet Search they're doing better than Ballmer did over the same period in the company's life cycle.
Well I'm a PhD student in Computer Engineering at a highly ranked university. I don't claim to be "smart". However I work hard, I can hold my own when it comes to coding, and I have professional software engineering experience before I started grad. school.
Google contacted me for an interview (I never applied). My phone interview with Google grilled me on undergraduate algorithms like graph traversal. Thats pretty much it. Now my undergraduate degree is actually Electrical Engineering, but my graduate research has been mostly software development. I'll admit I didn't remember details on many algorithms (never actually took an algorithms class), but I'm sure I could code up Diikstra's Algorithm once I read it over from a textbook.
Needless to say I was quickly rejected from Google. Why they contacted me for an interview and then tested me on things I have little background on, I have no idea. The interviewer even admitted to me that he actually doesn't use any of this stuff in his day-to-day job.
Thus I'm skeptical when these companies claim that they can't find people. They may have a hard time finding people that fit the exact cookie cutter they are looking for.
If you ignore the messenger and his obvious attempts to spin Google as "out of control," you still must admit that managing rapid growth is a tricky problem. Other companies (e.g., SGI) have not handled it well. Transmitting knowledge about the company and its products is harder when the people expected to do that have only been there a few months themselves.
While I am no fan of Steve Ballmer I have to agree that he may be right or at least right enough that I would choose not to invest in Google, good company though it may be, at the current share prices, especially considering the relatively meager stream of advertising income compared to the massive inflow of investor monies.
Why? What's wrong with their business model, why would it fail?
Nothing, but there is such a thing as an overvalued share price and Google is the textbook example. There are other shares that are worth even more than Google, Berkshire Hathaway comes to mind, but those companies tend to generate a lot of actual real cash value each year. If one discounts the advertising revenue, which is by all accounts meager compared with the current share prices, then it becomes extremely difficult to estimate how much the remaining value, including intellectual property, human capital, and experience may eventually be worth. It is not *zero* to be sure, but exactly how much and when? The answer to that question determines how much you are willing to pay for a share and how much you ultimately earn in that investment depends upon how accurate your initial estimation was. In the meantime your $400+ dollars per share are NOT earning money doing something else. It is a substantial risk and one that not every investor is necessarily willing to take. On, the other hand, "there is a sucker born every minute," or so the saying goes.
Their revenues are increasing, and search-related advertising is hardly going to disappear -- never mind their expansion into other types of advertising.
Yes, but see above for why this does not necessarily a good investment make...
As for rate of growth, define growth. You mean rate of employee growth? Sure, exponential growth is unsustainable. But with gross profits over 6 Bn on revenue over 10 Bn, I think they've got pockets deep enough to continue to hire freely -- never mind the cash reserves of 11 Bn.
I think that he meant employee growth, but even employee growth must be justified in terms of additional value created for the business. It does not matter if the company has a bankroll of $10 x 10^4 or $10 x 10^7 dollars. If the business cannot earn at least $1 plus prime interest rate or 10 year treasury rate (4.45% currently) then that dollar should be returned to the shareholders in dividends after all of the expenses have been paid. Reinvestment is not always a good idea, it depends upon the current economic climate and the potential returns. The fact that Google has 11 Bn cash reserves is immaterial to this point.
Think about it. If they pay $200,000 annually (incl benefits) for good employees, they can still hire 30,000 of those people while still turning a gross profit.
The company is generating money based upon advertising revenue and EXPECTED future revenues in the form of inflow of investor money, but this does not necessarily mean that each employee is generating a gross profit by their direct efforts.
Assuming, of course, that their revenues don't drop off, which would run counter to almost every analyst's predictions.
If you are an investor in Google right now, especially if you didn't get in real early (and who but the insiders did?), you had better hope that not only does revenue NOT drop off, but that growth doesn't slow either because you are going to need some pretty powerful revenue growth to come out ahead at $400+ per share on P/E ratio of 40+.
So much for the free market, then
True.
Balmer: "I don't really know that anybody's proven that a random collection of people doing their own thing actually creates value."
Microsoft's Arno Edlemann: "Usually Microsoft doesn't develop products, we buy products."
It's pretty clear that MS doesn't really understand what "Innovation" really is, and how to do it. In the long term, this will bite them in the ass. Continuing their abusive and illegal behavior to maintain their de facto monopoly is their only hope of long-term survival, and they know it.
Awesome rebuttal! Well done! I know I'm swayed by your convincing arguments!
I'm running a pirated copy of Linux.
I don't really know that anybody's proven that a random collection of people doing their own thing actually creates value.
Hmmm. A random collection of people doing their own thing has saved me from ever having to run your ugly, bloated operating system!
Why stick up for big business?
Oddly enough, there's a name for a random collection of people doing their own self-interested thing that creates value. It's called capitalism. Ballmer doesn't understand this because in capitalism there's this thing called competition, and that's a dirty word in his little world.
Means not working for YOU, Steve.
..don't panic